• SmartFinancial Announces Results for the First Quarter 2022

    ソース: Nasdaq GlobeNewswire / 25 4 2022 17:00:58   America/New_York

    Highlights for the First Quarter of 2022

    • Operating earnings1 of $8.6 million, or $0.51 per diluted common share, for the first quarter of 2022
    • Net organic loan and lease growth of over $136.9 million - 21% annualized quarter-over-quarter increase
    • Non-time deposit growth of over $195.0 million – 23% annualized quarter-over-quarter increase
    • Credit quality remains solid with nonperforming assets to total assets of 0.11%

    KNOXVILLE, Tenn., April 25, 2022 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $8.3 million, or $0.49 per diluted common share, for the first quarter of 2022, compared to net income of $9.8 million, or $0.65 per diluted common share, for the first quarter of 2021, and compared to prior quarter net income of $6.7 million, or $0.40 per diluted common share. Operating earnings1, which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $8.6 million, or $0.51 per diluted common share, in the first quarter of 2022, compared to $9.8 million, or $0.65 per diluted common share, in the first quarter of 2021, and compared to $8.7 million, or $0.52 per diluted common share, in the fourth quarter of 2021.

    Billy Carroll, President & CEO, stated: “I am extremely pleased with our results for the first quarter.  Both loans and deposits grew at an outstanding pace, as our sales team executed our organic growth strategy.  Our wealth platform, insurance platform and equipment finance group all also had strong performance.  Earnings performance was on target and while keeping an eye on inflationary pressure in our economy, we remain bullish on the company’s 2022 outlook.”

    SmartFinancial's Chairman, Miller Welborn, concluded: “2022 has certainly started on a good note for us. Just as we projected and forecasted our plan is on track. The execution at all levels shows our commitment and discipline to be a top performing bank”. 

    Net Interest Income and Net Interest Margin

    Net interest income was $30.1 million for the first quarter of 2022, compared to $29.9 million for the prior quarter. Average earning assets totaled $4.22 billion, an increase of $139.1 million. The growth in average earnings assets was primarily driven by an increase in average securities of $276.1 million and average loans and leases of $54.3 million, offset by a decrease in average interest-earning cash of $190.1 million, primarily from the purchase of securities.   Average interest-bearing liabilities increased $121.8 million, related to continued core deposit growth.

    The tax equivalent net interest margin was 2.91% for the first quarter of 2022, compared to 2.92% for the prior quarter. The tax equivalent net interest margin was positively impacted by several factors, mainly the continued deployment of excess cash and cash equivalents into loans and securities.  However, the deployment of total cash and cash equivalents was partially offset by a quarter-over-quarter deposit increase of over $169.4 million. Additionally, the yield on interest-earning assets was negatively impacted due to a decrease quarter-over-quarter in loan discount and Payroll Protection Program (“PPP”) fee accretion of $727 thousand.

    The yield on interest-bearing liabilities decreased to 0.36% for the first quarter of 2022 compared to 0.39% for the prior quarter. The cost of average interest-bearing deposits was 0.27% for the first quarter of 2022 compared to 0.29% for the prior quarter, a decrease of 2 basis points. The lower cost of average deposits was attributable to the growth of non-time deposits and the continued maturation and repricing of time deposits. The cost of total deposits for the first quarter of 2022 was 0.20% compared to 0.22% in the prior quarter.

    1 Non-GAAP measures. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation

    The following table presents selected interest rates and yields for the periods indicated:

            
      Three Months Ended   
      Mar Dec Increase 
    Selected Interest Rates and Yields 2022 2021 (Decrease) 
    Yield on loans and leases 4.40%4.53%(0.13)%  
    Yield on earning assets, FTE 3.18%3.20%(0.02)%  
    Cost of interest-bearing deposits 0.27%0.29%(0.02)%  
    Cost of total deposits 0.20%0.22%(0.02)%  
    Cost of interest-bearing liabilities 0.36%0.39%(0.03)%  
    Net interest margin, FTE 2.91%2.92%(0.01)%  

    Provision for Loan and Lease Losses and Credit Quality

    At March 31, 2022, the allowance for loan and lease losses was $20.1 million. The allowance for loan and lease losses to total loans and leases was 0.72% as of March 31, 2022, and December 31, 2021, respectively.   For the Company’s originated loans and leases, the allowance for loan and lease losses to originated loans and leases, less PPP loans, was 0.71% as of March 31, 2022, compared to 0.74% as of December 31, 2021. The remaining discounts on the acquired loan and lease portfolio totaled $14.9 million, or 3.64% of acquired loans and leases as of March 31, 2022.  

    The following table presents detailed information related to the provision for loan and lease losses for the periods indicated (dollars in thousands):

                
       Three Months Ended    
        Mar   Dec     
     Provision for Loan and Lease Losses Rollforward  2022   2021   Change 
     Beginning balance $19,352  $19,295  $57  
     Charge-offs  (488)  (499)  11  
     Recoveries  208   134   74  
     Net charge-offs  (280)  (365)  85  
     Provision  1,006   422   (584) 
     Ending balance $20,078  $19,352  $726  
                
     Allowance for loan losses to total loans and leases, gross  0.72%  0.72%  -% 

    The Company is not required to implement the provisions of the Current Expected Credit Losses (“CECL”) accounting standard until January 1, 2023 and is continuing to account for the allowance for loan and lease losses under the incurred loss model.

    Nonperforming loans and leases as a percentage of total loans and leases was 0.12% as of March 31, 2022, and December 31, 2021, respectively.   Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.11% as of March 31, 2022, and December 31, 2021, respectively. 

    The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):

                  
       Three Months Ended     
        Mar   Dec   Increase 
     Credit Quality  2022   2021   (Decrease) 
     Nonaccrual loans and leases $3,342  $3,124  $218  
     Loans and leases past due 90 days or more and still accruing  -   64   (64) 
     Total nonperforming loans and leases  3,342   3,188   154  
     Other real estate owned  1,612   1,780   (168) 
     Other repossessed assets  27   90   (63) 
     Total nonperforming assets $4,981  $5,058  $(77) 
                  
     Nonperforming loans and leases to total loans and leases, gross  0.12%  0.12%  -% 
     Nonperforming assets to total assets  0.11%  0.11%  -% 

    Noninterest Income

    Noninterest income increased $305 thousand to $7.1 million for the first quarter of 2022 compared to $6.8 million for the prior quarter. During the first quarter of 2022, the primary components of the changes in noninterest income were as follows:

    • Increase in investment services, income led by the new Gulf Coast advisory team’s continued client onboarding;
    • Increase in insurance commissions, driven by seasonality;
    • Decrease in interchange and debit card transaction fees, related to lower volume; and
    • Decrease in other, primarily from the gain on sale of credit card portfolio in prior quarter.

    The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):

                 
       Three Months Ended   
        Mar   Dec   Increase
     Noninterest Income  2022   2021   (Decrease)
     Service charges on deposit accounts $1,319  $1,372  $(53) 
     Gain (loss) on sale of securities, net  -   -   -  
     Mortgage banking income  834   803   31  
     Investment services  1,070   621   449  
     Insurance commissions  901   517   384  
     Interchange and debit card transaction fees  1,284   1,445   (161) 
     Other  1,703   2,048   (345) 
     Total noninterest income $7,111  $6,806  $305  

    Noninterest Expense

    Noninterest expense decreased $2.1 million to $25.7 million for the first quarter of 2022 compared to $27.8 million for the prior quarter. During the first quarter of 2022, the primary components of the changes in noninterest expense were as follows:

    • Increase in other real estate and loan related expenses, primarily attributable to increased activity in loan related production;
    • Increase in advertising and marketing, related to additional advertising and public relations across the Company;
    • Decrease in data processing and technology as a result of continued efficiency efforts;
    • Increase in professional services, related to additional services performed during the quarter; and
    • Decrease in other expense, related to year-end expenses in prior period and continued efficiency efforts.

    The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):

                 
       Three Months Ended   
        Mar   Dec   Increase
     Noninterest Expense  2022   2021   (Decrease)
     Salaries and employee benefits $15,046  $14,990  $56  
     Occupancy and equipment  3,059   3,026   33  
     FDIC insurance  641   567   74  
     Other real estate and loan related expenses  729   583   146  
     Advertising and marketing  369   176   193  
     Data processing and technology  1,586   1,722   (136) 
     Professional services  1,242   847   395  
     Amortization of intangibles  637   660   (23) 
     Merger related and restructuring expenses  439   2,762   (2,323) 
     Other  1,970   2,490   (520) 
     Total noninterest expense $25,718  $27,823  $(2,105) 

    Income Tax Expense

    Income tax expense was $2.2 million for the first quarter of 2022, an increase of $485 thousand, compared to $1.8 million for the prior quarter.

    The effective tax rate was 21.38% for the first quarter of 2022 and 20.93% for the prior quarter.

    Balance Sheet Trends

    Total assets at March 31, 2022 were $4.72 billion compared with $4.61 billion at December 31, 2021. The increase of $107.0 million is primarily attributable to increases in securities of $270.6 million, loans and leases of $112.6 million, and other assets of $6.3 million, offset by a decrease in cash and cash equivalents of $281.1 million, primarily from the purchase of securities.

    Total liabilities increased to $4.30 billion at March 31, 2022 from $4.18 billion at December 31, 2021. The increase of $116.4 million was primarily from organic deposit growth of $169.4 million, offset by a decrease in borrowings of $50.9 million.

    Shareholders' equity at March 31, 2022 totaled $420.0 million, a decrease of $9.4 million, from December 31, 2021. The decrease in shareholders' equity was primarily from the change in accumulated other comprehensive income (loss) of $17.0 million and dividends paid of $1.2 million, offset by net income of $8.3 million for the three months ended March 31, 2022.   Tangible book value per share1 was $18.64 at March 31, 2022, compared to $19.26 at December 31, 2021. Tangible common equity1 as a percentage of tangible assets1 was 6.82% at March 31, 2022, compared with 7.18% at December 31, 2021.

    1 Non-GAAP measures. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation

    The following table presents selected balance sheet information for the periods indicated (dollars in thousands):

               
      Mar Dec Increase 
    Selected Balance Sheet Information 2022 2021 (Decrease) 
    Total assets $4,718,579 $4,611,579 $107,000  
    Total liabilities  4,298,537  4,182,149  116,388  
    Total equity  420,042  429,430  (9,388) 
    Securities  830,015  559,422  270,593  
    Loans and leases  2,806,026  2,693,397  112,629  
    Deposits  4,191,353  4,021,938  169,415  
    Borrowings  36,713  87,585  (50,872) 

    Conference Call Information

    SmartFinancial issued this earnings release for the first quarter of 2022 on Monday, April 25, 2022, and will host a conference call on Tuesday, April 26, 2022, at 10:00 a.m. ET. To access this interactive teleconference, dial (844) 200-6205 or (646) 904-5544 and entering the access code, 293033. A replay of the conference call will be available through June 28, 2022, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 552729.   Conference call materials will be published on the Company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call.

    About SmartFinancial, Inc.

    SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with branches across Tennessee, Alabama, and the Florida Panhandle. Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.

      
    Source 
    SmartFinancial, Inc. 
      
    Investor Contacts 
    Billy Carroll 
    President & CEO 
    (865) 868-0613   billy.carroll@smartbank.com 
      
    Ron Gorczynski 
    Executive Vice President, Chief Financial Officer 
    (865) 437-5724 ron.gorczynski@smartbank.com 
      
    Media Contact 
    Kelley Fowler 
    Senior Vice President, Public Relations & Marketing 
    (865) 868-0611    kelley.fowler@smartbank.com 
      

    Non-GAAP Financial Measures

    Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures, including: (i) operating earnings, (ii) operating return on average assets, (iii) operating pre-tax pre-provision return on average assets, (iv) operating return on average shareholders' equity, (v) return on average tangible common equity, (vi) operating return on average tangible common equity, (vii) operating efficiency ratio, (viii) operating noninterest income, (ix) operating pre-tax pre-provision earnings (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value; (xiv) tangible assets; and ratios derived therefrom, in its analysis of the company's performance. Operating earnings excludes the following from net income: securities gains and losses and merger related and restructuring expenses. Operating return on average assets is the annualized operating earnings (Non-GAAP) divided by average assets. Operating pre-tax pre-provision return on average assets is the annualized operating pre-tax pre-provision income earnings (Non-GAAP) by average assets. Operating return on average shareholders' equity is the annualized operating earnings (Non-GAAP) divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity (Non-GAAP). Operating return on average tangible common equity is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP). The operating efficiency ratio includes an adjustment for taxable equivalent yields and excludes securities gains and losses and merger related and restructuring expenses from the efficiency ratio. Operating noninterest income excludes the following from noninterest income: securities gains and losses. Operating pre-tax pre-provision earnings is net interest income plus operating noninterest income (Non-GAAP) less operating noninterest expense (Non-GAAP). Operating noninterest expense excludes the following from noninterest expense: prior year adjustments to salaries, merger related and restructuring expenses and certain franchise tax true-up expenses. Tangible common equity (Non-GAAP) and average tangible common equity (Non-GAAP) excludes goodwill and other intangible assets from shareholders' equity and average shareholders' equity, respectively. Tangible book value (Non-GAAP) is tangible common equity (Non-GAAP) divided by common shares outstanding. Tangible assets (Non-GAAP) excludes goodwill and other intangibles from total assets. Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers. Management believes these Non-GAAP financial measures also enhance investors' ability to compare period-to-period financial results and allow investors and company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

    Forward-Looking Statements

    This news release may contain statements that are based on management’s current estimates or expectations of future events or future results, and that may be deemed to constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements, including statements regarding the effects of the COVID-19 pandemic and related variants on the Company’s business and financial results and conditions, are not historical in nature and can generally be identified by such words as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “may,” “estimate,” and similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results of SmartFinancial to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others, (1) risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively; (2) claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters; (3) the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize; (4) disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships; (5) our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank; (6) risks related to the acquisition of Sevier County Bancshares, Inc. (“SCB”); (7) the risk that the anticipated benefits from the acquisition of SCB may not be realized in the time frame anticipated; (8) changes in management’s plans for the future; (9) prevailing, or changes in, economic or political conditions, particularly in our market areas; (10) credit risk associated with our lending activities; (11) changes in interest rates, loan demand, real estate values, or competition; (12) changes in accounting principles, policies, or guidelines; (13) changes in applicable laws, rules, or regulations; (14) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic and related variants; (15) the impact of the COVID-19 pandemic and related variants on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (16) higher inflation and its impacts; (17) the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine; and (18) other general competitive, economic,, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands)

                    
      Ending Balances
       Mar      Dec      Sep      Jun      Mar 
       2022   2021   2021   2021   2021 
    Assets:                   
    Cash and cash equivalents $763,968  $1,045,077  $1,091,160  $673,515  $556,701 
    Securities available-for-sale, at fair value  540,483   482,453   339,343   250,817   250,937 
    Securities held-to-maturity, at amortized cost  289,532   76,969   —   —   — 
    Other investments  16,499   16,494   14,972   14,584   14,728 
    Loans held for sale  5,894   5,103   3,418   4,334   7,870 
    Loans and leases  2,806,026   2,693,397   2,652,663   2,468,318   2,487,129 
    Less: Allowance for loan and lease losses  (20,078)  (19,352)  (19,295)  (18,310)  (18,370)
    Loans and leases, net  2,785,948   2,674,045   2,633,368   2,450,008   2,468,759 
    Premises and equipment, net  84,793   85,958   85,346   72,314   72,697 
    Other real estate owned  1,612   1,780   2,415   2,499   3,946 
    Goodwill and other intangibles, net  105,215   105,852   104,930   90,966   86,350 
    Bank owned life insurance  80,074   79,619   79,145   72,013   71,586 
    Other assets  44,561   38,229   29,934   23,306   23,629 
    Total assets $4,718,579  $4,611,579  $4,384,031  $3,654,356  $3,557,203 
    Liabilities:                    
    Deposits:                    
    Noninterest-bearing demand $1,093,933  $1,055,125  $977,180  $807,560  $777,968 
    Interest-bearing demand  975,272   899,158   847,007   702,470   683,887 
    Money market and savings  1,573,101   1,493,007   1,389,393   1,140,029   1,073,941 
    Time deposits  549,047   574,648   585,692   489,413   512,417 
    Total deposits  4,191,353   4,021,938   3,799,272   3,139,472   3,048,213 
    Borrowings  36,713   87,585   88,748   78,834   82,642 
    Subordinated debt  41,952   41,930   41,909   39,388   39,367 
    Other liabilities  28,519   30,696   29,382   23,269   22,923 
    Total liabilities  4,298,537   4,182,149   3,959,311   3,280,963   3,193,145 
    Shareholders' Equity:               
    Common stock  16,893   16,803   16,801   15,110   15,105 
    Additional paid-in capital  293,376   292,937   292,760   252,039   251,836 
    Retained earnings  125,329   118,247   112,600   103,906   96,034 
    Accumulated other comprehensive income (loss)  (15,556)  1,443   2,559   2,338   1,083 
    Total shareholders' equity  420,042   429,430   424,720   373,393   364,058 
    Total liabilities & shareholders' equity $4,718,579  $4,611,579  $4,384,031  $3,654,356  $3,557,203 

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands except share and per share data)

                    
     Three Months Ended  
     Mar    Dec    Sep    Jun    Mar    
     2022 2021 2021 2021  2021 
    Interest income:                    
    Loans and leases, including fees$29,643 $30,567 $31,674 $28,323  $28,018 
    Investment securities:                    
    Taxable 2,418  1,341  832  916   724 
    Tax-exempt 368  322  331  304   259 
    Federal funds sold and other earning assets 486  547  474  309   291 
    Total interest income 32,915  32,777  33,311  29,852   29,292 
    Interest expense:                    
    Deposits 2,014  2,116  2,153  2,248   2,331 
    Borrowings 157  180  121  123   117 
    Subordinated debt 626  626  655  584   584 
    Total interest expense 2,797  2,922  2,929  2,955   3,032 
    Net interest income 30,118  29,855  30,382  26,897   26,260 
    Provision for loan and lease losses 1,006  422  1,149  (5)  67 
    Net interest income after provision for loan and lease losses 29,112  29,433  29,233  26,902   26,193 
    Noninterest income:                    
    Service charges on deposit accounts 1,319  1,372  1,220  1,048   1,009 
    Gain (loss) on sale of securities, net —  —  45  —   — 
    Mortgage banking 834  803  994  1,105   1,139 
    Investment services 1,070  621  448  567   531 
    Insurance commissions 901  517  745  557   1,466 
    Interchange and debit card transaction fees 1,284  1,445  1,078  922   839 
    Other 1,703  2,048  1,779  944   707 
    Total noninterest income 7,111  6,806  6,309  5,143   5,691 
    Noninterest expense:                    
    Salaries and employee benefits 15,046  14,990  13,594  12,203   10,869 
    Occupancy and equipment 3,059  3,026  2,536  2,294   2,341 
    FDIC insurance 641  567  525  371   371 
    Other real estate and loan related expense 729  583  407  506   602 
    Advertising and marketing 369  176  235  230   190 
    Data processing and technology 1,586  1,722  1,753  1,509   1,379 
    Professional services 1,242  847  810  849   641 
    Amortization of intangibles 637  660  711  441   444 
    Merger related and restructuring expenses 439  2,762  464  372   103 
    Other 1,970  2,490  2,274  2,022   2,524 
    Total noninterest expense 25,718  27,823  23,309  20,797   19,464 
    Income before income taxes 10,505  8,416  12,233  11,248   12,420 
    Income tax expense 2,246  1,761  2,633  2,470   2,664 
    Net income$8,259 $6,655 $9,600 $8,778  $9,756 
    Earnings per common share:                    
    Basic$0.49 $0.40 $0.62 $0.59  $0.65 
    Diluted$0.49 $0.40 $0.61 $0.58  $0.65 
    Weighted average common shares outstanding:                    
    Basic 16,718,371  16,699,010  15,557,528  15,003,657   15,011,573 
    Diluted 16,858,288  16,846,315  15,691,126  15,126,184   15,111,947 

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands)
    YIELD ANALYSIS

                              
      Three Months Ended  
      March 31, 2022 December 31, 2021 March 31, 2021 
         Average          Yield/    Average          Yield/    Average           Yield/ 
      Balance Interest1 Cost1 Balance Interest1 Cost1 Balance Interest1 Cost1 
    Assets:                                  
    Loans and leases, including fees2 $2,724,206 $29,570 4.40%  $2,669,943 $30,510 4.53%  $2,428,499 $27,943 4.67%
    Loans held for sale  3,890  73 7.62%   5,116  57 4.44%   7,913  75 3.82%  
    Taxable securities  612,980  2,418 1.60%   339,371  1,341 1.58%   136,492  724 2.15%
    Tax-exempt securities  105,516  533 2.05%   102,989  479 1.85%   90,849  409 1.82%
    Federal funds sold and other earning assets  775,834  486 0.25%   965,899  547 0.22%   417,144  291 0.28%
    Total interest-earning assets  4,222,426  33,080 3.18%   4,083,318  32,934 3.20%   3,080,897  29,442 3.88%
    Noninterest-earning assets  381,807       383,783         275,272        
    Total assets $4,604,233      $4,467,101        $3,356,169        
                              
    Liabilities and Stockholders’ Equity:                                  
    Interest-bearing demand deposits $921,835  446 0.20%  $853,763  403 0.18%  $641,214  256 0.16%
    Money market and savings deposits  1,523,188  859 0.23%   1,428,472  920 0.26%   983,893  821 0.34%
    Time deposits  561,207  709 0.51%   583,165  793 0.54%   526,062  1,254 0.97%
    Total interest-bearing deposits  3,006,230  2,014 0.27%   2,865,400  2,116 0.29%   2,151,169  2,331 0.44%
    Borrowings  69,769  157 0.91%   88,828  180 0.80%   81,837  117 0.58%
    Subordinated debt  41,938  626 6.05%   41,917  625 5.93%   39,354  584 6.01%
    Total interest-bearing liabilities  3,117,937  2,797 0.36%   2,996,145  2,921 0.39%   2,272,360  3,032 0.54%
    Noninterest-bearing deposits  1,028,298       1,016,438         700,962        
    Other liabilities  30,053       27,710         21,928        
    Total liabilities  4,176,288       4,040,293         2,995,250        
    Shareholders' equity  427,945       426,808         360,919        
    Total liabilities and shareholders' equity $4,604,233      $4,467,101        $3,356,169        
                              
    Net interest income, taxable equivalent    $30,283       $30,013        $26,410    
    Interest rate spread       2.82%          2.81%          3.33%  
    Tax equivalent net interest margin       2.91%          2.92%          3.48%  
                              
    Percentage of average interest-earning assets to average interest-bearing liabilities       135.42%          136.29%          135.58%  
    Percentage of average equity to average assets       9.29%          9.55%          10.75%  

    1 Taxable equivalent
    2 Includes average balance of $53,966, $80,501 and $312,582 in PPP loans for the quarters ended March 31, 2022, December 31, 2021, and March 31, 2021, respectively.

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands)

                     
      As of and for The Three Months Ended  
         Mar    Dec    Sep    Jun    Mar 
      2022 2021 2021 2021 2021 
    Composition of Loans and Leases:                   
    Commercial real estate:                   
    owner occupied $612,675 $590,064 $560,671 $492,750 $477,293 
    non-owner occupied  863,181  794,092  752,576  669,741  593,348 
    Commercial real estate, total  1,475,856  1,384,156  1,313,247  1,162,491  1,070,641 
    Commercial & industrial  461,153  488,024  469,739  496,114  686,010 
    Construction & land development  314,654  278,386  326,374  300,704  285,973 
    Consumer real estate  483,229  477,272  478,161  444,640  432,486 
    Leases  59,892  53,708  53,396  53,038  — 
    Consumer and other  11,242  11,851  11,746  11,331  12,019 
    Total loans and leases $2,806,026 $2,693,397 $2,652,663 $2,468,318 $2,487,129 
                     
    Asset Quality and Additional Loan Data:                   
    Nonperforming loans and leases $3,342 $3,188 $3,567 $3,758 $6,234 
    Other real estate owned  1,612  1,780  2,415  2,499  3,946 
    Other repossessed assets  27  90  77  199  — 
    Total nonperforming assets $4,981 $5,058 $6,059 $6,456 $10,180 
    Restructured loans and leases not included in nonperforming loans and leases $625 $206 $212 $219 $250 
    Net charge-offs to average loans and leases (annualized)  0.04%   0.05%   0.03%   0.01%   0.01%
    Allowance for loan and leases losses to loans and leases  0.72%   0.72%   0.73%   0.74%   0.74%
    Nonperforming loans and leases to total loans and leases, gross  0.12%   0.12%   0.13%   0.15%   0.25%
    Nonperforming assets to total assets  0.11%   0.11%   0.14%   0.18%   0.29%
    Acquired loan and lease fair value discount balance $14,913 $15,483 $13,001 $12,982 $12,951 
    Accretion income on acquired loans and leases  389  457  1,760  761  1,636 
    PPP net fees deferred balance  1,112  2,038  3,783  6,651  7,351 
    PPP net fees recognized  1,066  1,725  2,873  2,132  2,398 
                     
    Capital Ratios:                   
    Equity to Assets  8.90%   9.31%   9.69%   10.22%   10.23%
    Tangible common equity to tangible assets (Non-GAAP)1  6.82%   7.18%   7.47%   7.93%   8.00%
                     
    SmartFinancial, Inc.2                   
    Tier 1 leverage  7.41%   7.45%   8.36%   8.10%   8.55%
    Common equity Tier 1  10.30%   10.56%   10.85%   10.63%   11.29%
    Tier 1 capital  10.30%   10.56%   10.85%   10.63%   11.29%
    Total capital  12.22%   12.55%   12.92%   12.80%   13.62%
                     
    SmartBank  Estimated3               
    Tier 1 leverage  8.24%   8.23%   9.20%   8.75%   9.33%
    Common equity Tier 1  11.46%   11.66%   11.94%   11.50%   12.31%
    Tier 1 capital  11.46%   11.66%   11.94%   11.50%   12.31%
    Total capital  12.08%   12.29%   12.59%   12.19%   13.05%

    1Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures.
    2All periods presented are estimated.
    3 Current period capital ratios are estimated as of the date of this earnings release.

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands except share and per share data)

                    
     As of and for The 
     Three Months Ended     
     Mar    Dec    Sep    Jun    Mar    
     2022 2021 2021 2021 2021 
    Selected Performance Ratios (Annualized):                    
    Return on average assets 0.73% 0.59% 0.97% 0.98% 1.18%
    Return on average shareholders' equity 7.83% 6.19% 9.70% 9.53% 10.96%
    Return on average tangible common equity¹ 10.39% 8.18% 12.84% 12.54% 14.41%
    Noninterest income / average assets 0.63% 0.60% 0.64% 0.58% 0.69%
    Noninterest expense / average assets 2.27% 2.47% 2.35% 2.33% 2.35%
    Efficiency ratio 69.08% 75.89% 63.53% 64.91% 60.92%
                    
    Operating Selected Performance Ratios (Annualized):                    
    Operating return on average assets1 0.76% 0.77% 1.00% 1.01% 1.19%
    Operating PTPP return on average assets1 1.05% 1.03% 1.39% 1.30% 1.52%
    Operating return on average shareholders' equity1 8.14% 8.09% 10.01% 9.83% 11.05%
    Operating return on average tangible common equity1 10.80% 10.70% 13.26% 12.93% 14.53%
    Operating efficiency ratio1 67.60% 68.07% 62.10% 63.46% 60.31%
    Operating noninterest income / average assets1 0.63% 0.60% 0.63% 0.58% 0.69%
    Operating noninterest expense / average assets1 2.23% 2.23% 2.30% 2.29% 2.34%
                    
    Selected Interest Rates and Yields:                    
    Yield on loans and leases 4.40% 4.53% 4.95% 4.52% 4.67%
    Yield on earning assets, FTE 3.18% 3.20% 3.67% 3.65% 3.88%
    Cost of interest-bearing deposits 0.27% 0.29% 0.34% 0.39% 0.44%
    Cost of total deposits 0.20% 0.22% 0.25% 0.29% 0.33%
    Cost of interest-bearing liabilities 0.36% 0.39% 0.44% 0.49% 0.54%
    Net interest margin, FTE 2.91% 2.92% 3.35% 3.29% 3.48%
                    
    Per Common Share:                    
    Net income, basic$0.49 $0.40 $0.62 $0.59 $0.65 
    Net income, diluted 0.49  0.40  0.61  0.58  0.65 
    Operating earnings, basic¹ 0.51  0.52  0.64  0.60  0.65 
    Operating earnings, diluted¹ 0.51  0.52  0.63  0.60  0.65 
    Book value 24.86  25.56  25.28  24.71  24.10 
    Tangible book value¹ 18.64  19.26  19.03  18.69  18.39 
    Common shares outstanding 16,893,282  16,802,990  16,801,447  15,109,736  15,104,536 

    ¹Non-GAAP measure. See reconciliation of Non-GAAP measures.

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands)
    NON-GAAP RECONCILIATIONS

                     
      Three Months Ended  
          Mar      Dec      Sep      Jun      Mar     
       2022   2021   2021   2021   2021  
    Operating Earnings:                     
    Net income (GAAP) $8,259  $6,655  $9,600  $8,778  $9,756  
    Noninterest income:                     
    Securities gains (losses), net  —   —   (45)  —   —  
    Noninterest expenses:                
    Merger related and restructuring expenses  439   2,762   464   372   103  
    Income taxes:                
    Income tax effect of adjustments  (113)  (713)  (108)  (96)  (27) 
    Operating earnings (Non-GAAP) $8,585  $8,704  $9,911  $9,054  $9,832  
    Operating earnings per common share (Non-GAAP):                     
    Basic $0.51  $0.52  $0.64  $0.60  $0.65  
    Diluted  0.51   0.52   0.63   0.60   0.65  
                     
    Operating Noninterest Income:                     
    Noninterest income (GAAP) $7,111  $6,806  $6,309  $5,143  $5,691  
    Securities gains (losses), net  —   —   (45)  —   —  
    Operating noninterest income (Non-GAAP) $7,111  $6,806  $6,264  $5,143  $5,691  
    Operating noninterest income (Non-GAAP)/average assets1  0.63%  0.60%   0.63%   0.58%    0.69%  
                     
    Operating Noninterest Expense:                     
    Noninterest expense (GAAP) $25,718  $27,823  $23,309  $20,797  $19,464  
    Merger related and restructuring expenses  (439)  (2,762)  (464)  (372)  (103) 
    Operating noninterest expense (Non-GAAP) $25,279  $25,061  $22,845  $20,425  $19,361  
    Operating noninterest expense (Non-GAAP)/average assets2  2.23%  2.23%   2.30%   2.29%    2.34%  
                     
    Operating Pre-tax Pre-provision ("PTPP") Earnings:                
    Net interest income (GAAP) $30,118  $29,855  $30,382  $26,897  $26,260  
    Operating noninterest income (Non-GAAP)  7,111   6,806   6,264   5,143   5,691  
    Operating noninterest expense (Non-GAAP)  (25,279)  (25,061)  (22,845)  (20,425)  (19,361) 
    Operating PTPP earnings (Non-GAAP) $11,950  $11,600  $13,801  $11,615  $12,590  
                     
    Non-GAAP Return Ratios:                     
    Operating return on average assets (Non-GAAP)3  0.76%  0.77%  1.00%  1.01%  1.19% 
    Operating PTPP return on average assets (Non-GAAP)4  1.05%  1.03%  1.39%  1.30%  1.52% 
    Return on average tangible common equity (Non-GAAP)5  10.39%  8.18%  12.84%  12.54%  14.41% 
    Operating return on average shareholders' equity (Non-GAAP)6  8.14%  8.09%  10.01%  9.83%  11.05% 
    Operating return on average tangible common equity (Non-GAAP)7  10.80%  10.70%  13.26%  12.93%  14.53% 
                     
    Operating Efficiency Ratio:                
    Efficiency ratio (GAAP)  69.08%  75.89%  63.53%  64.91%  60.92% 
    Adjustment for taxable equivalent yields  (0.31)%  (0.32)%  (0.25)%  (0.30)%  (0.28)% 
    Adjustment for securities gains (losses)  —%  —%  (0.08)%  —%  —% 
    Adjustment for merger related income and costs  (1.17)%  (7.50)%  (1.10)%  (1.15)%  (0.33)% 
    Operating efficiency ratio (Non-GAAP)  67.60%  68.07%  62.10%  63.46%  60.31% 

    1Operating noninterest income (Non-GAAP) is annualized and divided by average assets.
    2Operating noninterest expense (Non-GAAP) is annualized and divided by average assets.
    3Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.
    4Operating PTPP return on average assets (Non-GAAP) is the annualized operating PTPP earnings (Non-GAAP) divided by average assets.
    5Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP).
    6Operating return on average shareholders’ equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average equity.
    7Operating return on average tangible common equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP).

    SmartFinancial, Inc. and Subsidiary
    Condensed Consolidated Financial Information - (unaudited)
    (dollars in thousands)
    NON-GAAP RECONCILIATIONS

                     
      Three Months Ended  
          Mar      Dec      Sep      Jun      Mar  
       2022   2021   2021   2021   2021  
    Tangible Common Equity:                     
    Shareholders' equity (GAAP) $420,042  $429,430  $424,720  $373,393  $364,058  
    Less goodwill and other intangible assets  105,215   105,852   104,930   90,966   86,350  
    Tangible common equity (Non-GAAP) $314,827  $323,578  $319,790  $282,427  $277,708  
                     
    Average Tangible Common Equity:                     
    Average shareholders' equity (GAAP) $427,945  $426,808  $392,798  $369,325  $360,919  
    Less average goodwill and other intangible assets  105,617   104,193   96,250   88,551   86,424  
    Average tangible common equity (Non-GAAP) $322,328  $322,615  $296,548  $280,774  $274,495  
                     
    Tangible Book Value per Common Share:                
    Book value per common share (GAAP) $24.86  $25.56  $25.28  $24.71  $24.10  
    Adjustment due to goodwill and other intangible assets  (6.23)  (6.30)  (6.25)  (6.02)  (5.71) 
    Tangible book value per common share (Non-GAAP)1 $18.64  $19.26  $19.03  $18.69  $18.39  
                     
    Tangible Common Equity to Tangible Assets:                
    Total Assets $4,718,579  $4,611,579  $4,384,031  $3,654,356  $3,557,203  
    Less goodwill and other intangibles  105,215   105,852   104,930   90,966   86,350  
    Tangible Assets (Non-GAAP): $4,613,364  $4,505,727  $4,279,101  $3,563,390  $3,470,853  
    Tangible common equity to tangible assets (Non-GAAP)  6.82%  7.18%  7.47%  7.93%  8.00% 

    1Tangible book value per share is computed by dividing total stockholder's equity, less goodwill and other intangible assets by common shares outstanding.


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